Dealing With Tight Margins When You Open a Dollar Store
Dealing With Tight Margins When You Open a Dollar Store
There is one characteristic that puts some who open a dollar store way ahead of the others. That characteristic is associated with having a never ending desire to reduce costs for their business. It is almost as if they see any extra dollar store costs as evil. They fight to retain every penny possible as they manage their business. They see cost reduction as both the elimination of waste and the reward for excellence in business management. In this article I present steps to help you do exactly the same thing for your business. These steps can drive out costs for your business.
STEP #1) Cost reduction must become your mission.
That is right - this is a very tight margin business. As a result you must drive every penny possible out of everything associated with that business. Be intelligent about cost reduction. Negotiate for lower dollar store costs. Always make sure to understand the impact of those pennies before reducing. Look for creative actions that result in lower cost without hurting any other aspect of your business.
STEP #2) Become an outstanding inventory manager.
Build inventory turns for your business. To accomplish that goal you must maintain the lowest possible product inventory to support your sales. You never want to run completely out of a hot seller because your inventory went too low. On the other hand have 100's of a slow seller remaining as another big shipment arrives is wrong as well. Work to manage your inventory so the next replenishment order arrives with only 1-2 items remaining on display.
STEP #3) Become a bargain hunter.
The greatest opportunity for dollar store cost reduction is in the merchandise you purchase for resale. Work to be on every suppliers list of stores that buy abandoned merchandise, package changes, closeouts and overstocks. When the extra saving is offered take advantage of the opportunity. Purchase during monthly sales. Purchase trade show specials. Continually look for and take advantage of lower pricing.